States to miss debt target on slow economic growth: India Ratings

RBI data showed that fiscal deficit of states rose to 2.9% of gross domestic product (GDP) in their Revised Estimates, from 2.6% in their Budget Estimates for FY19

India Ratings & Research (Ind-Ra) has attributed widening of fiscal deficit in states in 2018-19 to slippage on the non-capital expenditure by them. Earlier, the Reserve Bank of India data showed that fiscal deficit of states rose to 2.9 per cent of gross domestic product (GDP) in their Revised Estimates, from 2.6 per cent in their Budget Estimates for FY19. On the other hand, capital expenditure was lower than budgeted, but it maintained a healthy trend. The rating agency believed that meeting the N K Singh panel’s recommended level of aggregate debt burden at 20 per cent of GDP by 2022-23 by states will be a challenge in an economic environment characterised by slow growth and weak demand.